Thriving in the data economy requires a legal framework and boldness. An Interview with Mouloud Dey, SAS.

Everybody’s talking about the data economy but few are really doing it. Some are aware but don’t know where to start, some are stuck into their internal complexity and a legal framework that does not favor innovation, so there are many reasons why businesses don’t move forward.

Today I’m discussing this topic with Mouloud Dey, Directeur Business Solutions at SAS.

Bertrand Duperrin : The data economy is a major stake for today and tomorrow. Everybody’s talking about it but it seems that very little change happens. What’s your view ?

Mouloud Dey : Everybody’s conscious data have more and more value. However, businesses have been accumulating data for a long time without doing anything with it.

Businesses should also look outside of their information system and take data from outside because the true value of data comes from correlating internal and external data.

BD : Are data so poorly used ?

MD : First let’s start with internal data, those coming from internal systems. 90% are not or poorly used. Everybody’s doing customer relationship but customers are still receiving the same offer or the same mail in three copies.

The big issue is silos : several departments have data on the customer but they don’t collaborate.

Data hoarded into silos is valueless data

Beyond these “legacy data”, other kinds of data became available : customer’s personal data, mobile data like geolocation, technical data like the IoT (not the consumer one, the industrial one made of sensors..)

But nothing’s been done to consolidate so far. The word “big data” has been overused because, in the end, businesses never asked themselves the key question which is about data sharing between players from different industries.

BD : Could you give me an example ?

MD : For instance banks may be interested in getting geolocation data about payments. On the other side, carriers may be interesting in a global vision of payments made on mobile.

It raises, of course, questions about the regulation about the use of personal data : people must be at least informed to have their consent. But we must be aware of one thing : as long as nothing is done we’re leaving room for US and Chinese “steamrollers” since they’re not as cautious as we are.

BD : We can see such initiatives, mostly in marketing with, for example, Starwood and Amex. But it seems to be more rare for operations data.

MD : Right. There’s a real blockage about sharing internal operation data. Information is power, it’s poorly shared inside so don’t expect to see it shared with other businesses. In the end it causes management issues because decision is made based on guts, not on data.

It’s a cultural issue : leaders must rely on data and accept to share data.

That’s what digital transformation is about : sharing data.

Data must be shared internally and externally but culture prevents it

The second challenge is to share data with players from other industries. Of courses it comes with many questions such as who must “own” the information on paiyments : banks, carriers, third part players like Amex ? While we’re asking this questions about legitimacy, Google and Apple are moving forward.

There’s a really urgency because if no move is made, many businesses may see new players stealing their core business.

BD : That’s why a “Digital Law” will be voted by the french parliament soon…

MD : What’s good with this law is that it will exist and raise questions, most of all on people’s conscient. It starts the debate. But I’m not sure a law is necessary. It takes months to make a law and, once vote, it will remain untouched for 5 or 10 years while industry players are moving much faster. They will use it, exploit its breaches, game it while the law will freeze the french businesses capability to innovate and adapt.

A digital law is good but must move as fast as the business

In general, regulation lags far behind what we’re leaving in our personal lives and that’s a pity because this law establishes an interesting framework that reinforces privacy without stifling innovation. A Google will find it constraining but the good point is that it established a framework which I think is mandatory when it comes to data sharing and circulation. In theory a business that’s both in the banking and insurance business can’t share data between these two activities…in theory. But, let me state it once again, the big problem with this law is that the world is going faster than the regulator.

The other problem is that it’s a local law while such laws should be transational. A framework about the use and circulation of data is a major stake in a globalized work. It even has to do with cyber-security.

A French law that’s not shared with our Europeans, americans and even chinese counterparts will be of very little use.

BD : As a vendor you must be very impacted by this fragmented legal environment ?

MD : Yes of course. Sometimes we have very good offers in the US but our french clients can’t buy them. For instance, in the telephony industry, we can map calls made between carriers (meta data about the calls and people, not the content of course), identify who are the influencers who may make people switch carriers.

BD : But law is quite the same in France and Italy. Is there something else ?

MD : Yes…a matter of culture. Sometimes, even is something is ok from a legal perspective, culture prevents from trying.

Businesses must not be that reluctant. Not only about data but also in the way they conduct their business. It’s easy to see the impact on data sharing between players : Orange is making a move towards the banking industry by buying a bank, not cooperating with it. When a company buys another it happens to the detriment of one culture while making different culture work together is better.

Orange could have got closer to the banking sector in general, not a bank in particular, create a new model to value data, a new transaction and payment model, a new relationship between banks and carriers which is the last link in the gain. It would have helped to establish the foundations of an industrial-grade IoT, able to manage any kind of transaction in the future.

This is a kind of initiatives a “Digital Law” should favor.

BD : So it’s more about managemet than technology ?

MD : This is cultural and organizational issue before all. Businesses are stuck in their silos and a culture where decisions are made at the top and executed by the rest of the company. On the contrary businesses should collaborated, foster an external and external sharing culture, collaborate with startups instead of buying them, do open innovation, hire talents from other industries and sectors.

Everybody’s speaking about digital transformation but very little transformation is done. At best it’s digital marketing but nothing changes internally.

Fear slows innovation down as much as regulation does

AccorHotels has a lot of initiatives but they’re still too cautious. It’s even worse with banks : they only see digital as a way to improve the customer relationship. They do online banking and are happy with that while they must reinvent payment and partner with other player and industries

BD : But banks are very regulated sectors, they can’t do what they want.

MD : It’s true that, for banks, regulation takes a lot of IT budgets and the part left for innovation and reinventing models is minor. Banks had everything to be leaders in data utilization but lost their advance and became shy on innovation.

BD : But in other industries we can see many businesses using data to fuel their digital transformation..?

MD : Data is at the heart of digital transformation. The challenge is to switch for using it “a posteriori” to using it “a priori” to design product and services…but mostly services. When you’re making engines for aircrafts, you must be able to sell the data from the engine but also the engine as a service.

Industrial players actually get the data economy

Large industrial players understand very well that data is way to reinvent their money. The real digital transformation happens on the field, in the physical world. We’ll still have some “Kodaks” that will disappear and others that understand that “As a service” is going to change the world.

Note : When I’m asked for examples of companies who are driving their digital transformation pretty well, I always mention industrial ones. I advice your to read this interview of Siemens’ CEO and this one from from GE’s CEO to understand what’s happening and how industry 4.0 matters.

BD : And how are the french companies doing compared to their foreign counterparts ?

MD : Schneider Electric gets it right. The automotive sector is working on the connected car but not fast enought. Industrial french companies gets the topic right… Michelin, Airbus, Snecma. But these companies are more international than french today.

Bank see digital as a customer relationship channel only

As I said, banks focus too much on customer relationship and not enough on reinventing their model. They could have a closer look at the blockchain, for example. The blockain is all about decentralizing transactions and contractual information. There are lots of declarations of intention but french players are far from building a consortium in this field and that’s a mistake. It, tomorrow, trust lies in the blockchain, businesses can’t let third part players manage this trust.

The question about the blockchain has nothing to do with technology. It’s to know if one wants to be in the business of trust or not.